Indonesia's Power Outage and Its Economic Calamity

Electricity has become a part of humans' daily lives; so many advanced technologies and even simple household items are powered by electricity. Without it, many activities will go awry. However, last Sunday Jakarta, along with its outskirts (West Java and Banten), experienced city-wide electrical shutdown, that affected millions of lives. It went on for almost 7 hours before everything was on again. It was the worst power outage since 2005 when the whole Java and Bali experienced power outage due to transmission line fault which resulted in approximately 100 million of lives unable to do their activities.

Everyone was frustrated and disappointed with Perusahaan Listrik Negara (PLN)'s incapability to conduct check-ups on the transmission lines which caused a shutdown that was uncalled for and extremely unnecessary. The blackout happened last Sunday and another brief one on Monday. Due to this blackout, the economic catastrophe felt by both PLN and its consumers is humongous.

Financial Meltdown

Such dismal shutdown on Sunday and a weekday when most of economic activities are being conducted hurt Indonesia's economy. From PLN's point of view, the amount of loss from this blackout is substantial. Already getting a reprimand from the President; PLN also has to compensate for the losses of the power users, as mandated by the law, if they demand to do so and they can get a lawsuit that amounts to fifty trillion rupiahs by an advocate forum. Fortunately for PLN, its sales revenue will not decrease as PLN monopolises the energy market. Even so, this creates doubt on PLN since there are no other companies that can back up the electricity in case PLN experiences more problems.

There is a Winner and There are a lot of Losers

Meanwhile, consumers (households, firms, banks, etc) were not able to operate due to the shortage of power. While most banks, MNCs, and state-owned enterprises were able to continue their operations thanks to early warnings from the PLN and the presence of generators, households and SMEs were affected badly by this incident. Many of them lost their sales revenue since they did not have the electricity necessary to work.

As a result, their production is halted which may cause delay or even cancellation of orders. For example, due to power shortage in Bandung, a barbershop was estimated to have lost more than 10 million rupiahs because most of its tools require electricity. Since nothing could function, they had to use the conventional ones instead which took longer to cut a customer's hair, resulting in a decrease in efficiency, increase in waiting time for customers. This reduced the number of consumers to have their hair cut resulting in a decrease in sales revenue.

However, there is a winner amid the chaotic blackout. The blackout caused an influx in demand for generators to power up firms and households resulting in many generators were sold out within minutes. For example, an electronics store in Bekasi managed to sell forty units of generators in total due to the blackout. 

One of the buyers was a football jersey confectionery entrepreneur who was in desperate need of a generator to finish up the orders and shipped them to his respective customers. Overall, many electricity consumers are the losers in this gargantuanly chaotic situation. However, generator firms surely took advantage of this influx of demand to increase their revenue.

Lower Barrier to Entry?

Due to this disappointing and repugnant incident, many Indonesians have demanded change from the PLN and the government; complete reshuffle of PLN's Board of Directors, impeachment of the Minister of Energy and Natural Resources and Minister of State-Owned Enterprises, improvement of renewable energy resources, etc.